MGCR 423 Lecture Notes - Lecture 3: Competitive Advantage, Value Chain, Outsourcing
18 Sep 2017
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Chapter 3 – The International Organization
• Global economy ➔ increasingly difficult for firms to fins ways to dev sustainable competitive advantage.
• Innovation is key at most org to maintain they CA
• People able to help the org efforts to innovate = valuable resource + potential to be CA.
Competitive advantage occurs when firms achieve strategic competitiveness + earn above average returns by
acquiring, building, and leveraging their resources for the purpose of taking advantage of opportunities in the
external env in ways that create value for customers.
Sustainable Competitive advantage: 3 factors
Degree of core competence obsolescence bc of env changes.
Availability of substitutes for the core competence.
Imitation of the core competence.
Select strategies: matching what a firm can do (i.e., resources, capabilities, core competencies) with what it might
do (i.e., opportunities, threats in the ext. env).
1. The Context of Internal Analysis
Challenge = soe esoues that ee taditioally itial to fis’ effots to P° L ost are now less likely to
become competitive advantage.
Firms are using their resources to form core competencies through which they successfully implement an
international strategy ➔ overcome advantages created by traditional resources.
Udestadig ho to leeage the fi’s unique bundle of resources + capabilities = key outcome decision
makers seek when analyzing the internal organization.
find more resources at oneclass.com
find more resources at oneclass.com
2. Creating Value
Value: easues y podut’s pefoae haateistis + its attiutes fo hih ustoes ae illig to pay.
• Fis’ esoues = foudatio fo P° goods/seies that ill eate alue fo ustoes.
• Firms w/ CA create more value for customer than do competitors.
• The stoge these fi’s oe opeteies, the geate the aout of alue they’e ale to eate for
their customers.
Resources (1), capabilities (2) and core competences (3) are the foundation of competitive advantage.
3. Creating competitive advantage – Resources
Resources: iputs ito a fi’s P° poess, suh as K euipet, the skills of idiidual eployees, patets, fiae,
and talented managers.
• Resources cover a spectrum of individual, social and organizational phenomena.
• By themselves = allow firm to create value for customers (i.e., above average earnings returns)
➔ Resources are combined to form capabilities.
Tangible resources: assets that can be observed and quantified (P° equipment, manufacturing facilities).
Intangible resources: ilude assets that ae ooted deeply i fi’s histoy, auulate oe tie, ad ae
relatively difficult for competitors to analyze and imitate (knowledge, trust b/n managers and employees).
Embedded in unique pattern of routines.
Difficult to analyze and imitate.
• Intangible resources > source of capabilities + core
competencies.
• Firms rely more on intangible resources (difficult to imitate)
➔ The more unobservable a resource, the more valuable that resource
is to create capabilities.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Chapter 3 the international organization: global economy increasingly difficult for firms to fins ways to dev sustainable competitive advantage. Innovation is key at most org to maintain they ca. People able to help the org efforts to innovate = valuable resource + potential to be ca. Competitive advantage occurs when firms achieve strategic competitiveness + earn above average returns by acquiring, building, and leveraging their resources for the purpose of taking advantage of opportunities in the external env in ways that create value for customers. Degree of core competence obsolescence bc of env changes. Availability of substitutes for the core competence. Select strategies: matching what a firm can do (i. e. , resources, capabilities, core competencies) with what it might do (i. e. , opportunities, threats in the ext. env): the context of internal analysis. Challenge = so(cid:373)e (cid:396)esou(cid:396)(cid:272)es that (cid:449)e(cid:396)e t(cid:396)aditio(cid:374)ally (cid:272)(cid:396)iti(cid:272)al to fi(cid:396)(cid:373)s" effo(cid:396)ts to p (cid:894) l (cid:272)ost(cid:895) are now less likely to become competitive advantage.
